Lyon's Suspended Contractors Licenses Returned

NEWPORT BEACH — Contractors licenses at the William Lyon Co., once one of the nation's largest home builders, were suspended for a week after the company failed to report and pay judgments in a construction defects case.

Licenses at the company and its William Lyon Homes Inc. affiliate were reinstated Monday after binding arbitration awards totaling $78,948 were paid, according to the Contractors' State License Board.

The state agency lifted the licenses Nov. 24, halting the Lyon companies from handling any contracting work, because they had failed to pay the judgments or to report the awards to the agency within 90 days, as required by law.

Executives and the companies' lawyer, James D. Stone, were unavailable for comment Monday.

The suspension, the latest in a series of problems besetting William Lyon Co., stemmed from defects in a Lyon-built house in Foothill Ranch, where residents of similar dwellings have filed a number of lawsuits over faulty construction.

Richard P. and Alana K. Knackstedt bought their home in the Cordova subdivision in February 1995, but moved out 18 months later after failing to get the company to make major repairs, including windows that lacked flashing to keep rainwater out.

The couple also had problems with stucco, heating, air conditioning and the roof, said their lawyer, Ben E. Lofstedt.

The Knackstedts sued, but agreed to go to binding arbitration. Last June, they won a $56,800 award, and in August, Lofstedt won an additional $22,148 in attorney fees and costs. The Lyon companies failed to pay either award, and Lofstedt reported the failure to the state agency.

The couple, meantime, moved back to Huntington Beach, where they still owned a home that was about half the size of their Foothill Ranch home, he said. They continue to make payments, though, on the vacated home.

The Lyon companies have been beset by numerous construction defect cases in the last decade. Irvine lawyer Kenneth S. Kasdan said he represents five Foothill Ranch homeowners in the Avignon subdivision who are suing over similar defects.

Kasdan previously has settled two lawsuits against Lyon companies, including an $8.7-million payment in a 1992 case involving a Lake Forest condominium complex where residents alleged that William Lyon Co. failed to build in safety measures.

In other problems, William Lyon has been battling widespread mold at the luxury Barcelona Resort Apartments it owns in Aliso Viejo. The mold forced some residents of the 590-unit complex to evacuate their units amid complaints that they were stricken with rashes, sinus congestion and flu-like symptoms.